Can I apply for a commercial mortgage with bad credit? Yes. Although commercial properties require a significantly high mortgage, qualifying for a commercial mortgage is quite easy because the investor is typically not subject to a credit check. If you’re concerned about your credit, then it may be more suitable to opt for a private mortgage, since private lenders often lend to people with bad or terrible credit. That said, you may incur higher interest rates the poorer your credit score is, especially if you frequently missed your payments. What kinds of documents are commonly required when applying for a commercial mortgage loan? When applying for a commercial or industrial mortgage, the following may be required:
- Two different types of identifying cards (IDs), such as a passport, drivers license, citizenship card, social insurance card, credit card, etc.
- An appraisal of the commercial property conducted by a reputable service provider
- A site inspection that requires the lender or their representative to visit the site and inspect the property
- Phase 1 environmental survey
- Leasing agreements that indicate declared income and revenues
- Proof of down payment in the case of a new purchase – as well as proof of the source of funds for the deposit (down payment)
- Proof of additional assets if any, including tax bills, mortgage statements, rental or lease agreements for other properties you own
- Business license / articles of incorporation
- NOA – Notice of Assessments or T1 Generals for the last 2 years
- Current list of tenants and rent rolls
- Statement of income and expense or a list of expenses associated with the commercial property
- Statement of current mortgage for investors looking for mortgage renewal or refinancing
- Property tax bill for investors looking for a mortgage renewal or refinancing
- Information about the property management company in charge of the day-to-day operations
Additional surveys and documentation may be requested depending on your situation and the content of your other documents
What amount of deposit or down payment is required for a commercial mortgage? Depending on the type of property, you may be required to provide a down payment of between 15 and 35%, with that of pure commercial properties being much higher at about 45 or 50%. For instance, the deposit required for multi-family residential with 5 or more units may be as low as 15%, while that of farmland mortgage may be as high as 45%. Most commercial and industrial mortgages require a down payment of 25%. That said, the deposit required of you will depend on your risk profile.
Commercial Mortgage Solutions
You may need a commercial or industrial mortgage if you need a loan to help you purchase a piece of land or property for the intention of doing business.
A commercial mortgage is similar to a residential mortgage in that the lender uses the property as collateral to secure the loan. You can apply for this loan in the form of a first, second, or even third mortgage. There are some instances when the investor may be required to use multiple properties to secure the loan, as a way to account for any limitations to the available equity or your capacity to qualify for the full loan amount applied for.
Regardless of your situation, our qualified commercial mortgage brokers at Northwood Mortgage can help to streamline the application and approval process of your commercial mortgage or industrial mortgage for any amount in the range of $100,000 to $100,000,000 and even beyond.
Understanding Commercial Mortgage in Detail
Investors looking for a commercial mortgage or to refinance a property in their possessions often face great difficulty in the process. That is why you may require the assistance of commercial mortgage brokers to facilitate the process.
There are different types of properties that may qualify for a commercial mortgage, including:
- Raw land
- Factories
- Apartment buildings (from fourplex to high rise)
- Institutional and specialty properties
- Land servicing and development
- Retail plazas
- Office units
- Hotels
- Shopping malls, etc.
Lenders examine any risk factors in your commercial mortgage application, which may require additional information that is not necessary when applying for residential loans. Most industrial mortgage applications require an appraisal, though some lenders may require an environmental study on the site of the property and the property itself. Other factors that may affect the process of getting your commercial application include income statements, lease agreements, the condition of the property, quality of tenants, and many more.
The information collected helps the lender better understand and assess the deal to make a decisive conclusion about your commercial mortgage application.
Having a financial plan for your property or business can help to influence a lender to grant your commercial or industrial mortgage under favourable terms, especially if they feel confident of your ability to deliver a steady income from their investment, besides simply securing the commercial property. Providing the lender with proof of the monthly revenue obtained from the property will give them peace of mind and subsequently reduce your interest rate and boost your savings.
Why You Need a Commercial Mortgage
The interest rates for commercial mortgages tend to be slightly higher than for residential mortgages, especially if you approach lenders that typically provide residential mortgages, such as banks, trust companies, and credit unions. Fortunately, your Northwood business mortgage broker can help you qualify for a first commercial mortgage with lower interest rates, if it’s insured by a third-party mortgage insurance policy.
Northwood commercial mortgage brokers can also help you navigate the mortgage application process, which requires more documentation compared to a residential mortgage, saving you a lot of time and effort. By leveraging our networks in the industry, our brokers can present you with a variety of commercial and industrial mortgage solutions from a range of favourable commercial mortgage lenders, including custom tailored options that specifically address your needs and goals.
Northwood commercial and industrial mortgage lenders strive to provide our clients with an expedited and hassle-free loan application process that not only involves finding the most suitable lender and commercial mortgage product for your business needs, but also getting your loan approved faster.
Northwood Mortgage As Your Industrial mortgage agent
Northwood Mortgage boasts a team of qualified commercial and industrial mortgage experts who specialize in finding unique solutions with lower business mortgage rates, as well as fast approvals for your business mortgage.
It can be difficult to compare commercial mortgage rates as the lending criteria is usually not advertised and the mortgage terms and conditions tend to vary greatly. This is why it’s advisable to seek the help of commercial mortgage brokers who can connect you to various lenders in your area.
Our brokers will first understand your needs and assess your current situation before searching for the most suitable lender that will offer a competitive quote with the rate and best possible mortgage terms to fund your business mortgage.
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